Saturday, May 17, 2008

Ex-Speaker Hires Lawyer in Inquiry

By WILLIAM K. RASHBAUM and RAY RIVERA, New York Times, May 17, 2008

Gifford Miller, the former City Council speaker, has hired a criminal defense lawyer to represent him in a federal investigation into the Council’s longstanding practice of allocating millions of dollars to phantom nonprofit groups, people involved in the case said on Friday.

Gifford Miller, at a 2005 news conference, has kept a low profile since the investigation into Council spending was disclosed.

The Council, which had hired a criminal lawyer to represent itself in the inquiry by federal prosecutors and the City Department of Investigation, recently hired another one to represent staff members who were being questioned, several of the people said.

The two lawyers, along with a third criminal defense lawyer representing the current speaker, Christine C. Quinn, are being paid with city funds; Mr. Miller’s lawyer, Henry Putzel III, is not.

Mr. Putzel said in a brief statement that the former speaker “had done nothing wrong, and when the facts are fully developed, I am quite sure that everyone will conclude as much.” He said that his client intends “to cooperate fully.”

Other than Ms. Quinn, Council officials said no one else in the 51-member Council had sought to have the city pay for individual legal representation, even though several have had to defend their spending in the face of news reports about allocations to nonprofit groups that hired council members’ friends, relatives and staff members. It was unclear, however, whether any council members had retained lawyers with their own money.

While no member of the Council has been singled out for scrutiny by investigators, the authorities have indicated that the inquiry is broad, aggressive and continuing along two tracks. First, it is examining the practice of squirreling away millions of dollars in the name of phantom organizations; second, it is reviewing how individual council members have directed their discretionary spending to nonprofit groups, and how the groups have spent it.

As a result, Council officials on Friday sent a memo to members outlining the process by which they can seek to have the Council pay for defense lawyers.

Mr. Miller, who served as speaker from January 2002 until December 2005, has kept a low profile since the investigation was disclosed in April.

The Council’s use of fictitious organizations to hold money in reserve dated to at least the 1990s, when Peter F. Vallone Sr. was the speaker. The practice, records show, expanded after Mr. Miller took over the following year and the names of the phantom groups became more legitimate-sounding.

Ms. Quinn, who has worked to increase transparency in the budget process, has said that when she learned of the practice last year she ordered that it be stopped.

Defense lawyers and prosecutors not involved in the case said it was routine — and common sense — for anyone who may be approached during an investigation to hire a lawyer.

“The smart thing to do is to hire a lawyer to figure out what the prosecutors think and want,” Edward A. McDonald, a white-collar defense lawyer who prosecuted public corruption cases as an assistant United States attorney, said in an e-mail message. One person involved in the case said that Evan Barr, the defense lawyer hired to represent Council staff members, had accompanied “a handful” of witnesses who had been interviewed.

Anxiety has been building among council members since the investigation was disclosed and Ms. Quinn revealed that she had been asked to turn over hundreds of pages of documents to the city and federal investigators. Less than two weeks later, federal authorities announced the indictment of two aides to Councilman Kendall Stewart of Brooklyn on charges that they had embezzled $145,000 from a group he funded.

Last month, Steven R. Peikin, the lawyer retained by the Council to represent it, briefed members about the inquiry.

In the memo sent on Friday, the Council’s Office of General Counsel said it and the city’s corporation counsel would decide to provide outside representation for council members on a case-by-case basis.

The decision, the memo said, would depend on several prerequisites, including a requirement that the council member or employee did not engage in intentional wrongdoing and cooperated with the investigation.

The ripples of the investigation are being felt throughout city government. Mayor Michael R. Bloomberg’s office this week detailed a little-known fund that it uses to finance council member items and outlined steps to tighten control over that process.

City agencies also have begun denying access to public documents about city contracts involving council member items, citing the investigation.